New York State Crosses the Hudson in Search of Taxes

As 3,000 New Yorkers who went shopping in New Jersey last weekend will soon discover, strangers were snooping around their cars: New York officials intent upon making them pay the sales tax they owe.

James W. Wetzler, State Commissioner of Taxation and Finance, sent four employees into parking lots across the Hudson River to write down the license numbers of cars with New York plates.

People whose names are coughed up by the computers will soon get polite letters telling them that they might just owe money to New York. About 600 other New Yorkers whose cars were spotted at shopping centers in Pennsylvania will receive similar letters.

"We're not sending anyone a bill," Mr. Wetzler said. "We're educating people about their tax responsibility so they won't be surprised if down the road they do get a bill from us for the sales tax owed on expensive items purchased out of state." Does Anyone Comply?

New Yorkers who shop out of state and bring their purchases back to New York are legally supposed to pay New York the difference between the sales tax in the other state and that in New York. Hardly anyone does so, however.

Mr. Wetzler is concerned that a tax change in New Jersey might be enticing New Yorkers to cross the Hudson to beat New York City's 8 1/4 percent sales tax. He has been especially unhappy about an advertisement for Ikea, the home-furnishings retailer that touted the "whopping" tax savings that Manhattanites could get at its store in Elizabeth.

Not surprisingly, news of Mr. Wetzler's license-plate caper was not well received yesterday in the Ikea parking lot.

"First of all, I have a right to spend my own money where ever I want," said Donna Currington, a 33-year-old nurse from the Bronx. "This is a time we all have to be careful with a dollar, and this stuff about the tax folks chasing after us is not going to deter me."

Another shopper, Lisen Sundgren, 26, an actress from Greenwich Village, said: "That sure sounds like Big Brother to me. I thought we put something like that all behind us with Russia giving up."

Since April 1, when New York's fiscal year began, 1,648 New Yorkers voluntarily paid nearly $1.7 million in sales tax for out-of-state purchases.

Karl Felsen, a spokesman for the Department of Taxation and Finance, said much of that was for purchases abroad. A probable reason that figure is as high as it is, he said, is publicity about New York's crackdown on such purchases. The state began combing United States Customs Service records two years ago.

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"More and more people are paying" the sales tax on purchases in other states," Mr. Felsen said.

"But it is still an infinitesimally tiny portion of the total," he said. "We're still chipping away at it, but the real hope is Federal legislation" that would require retailers in one state to collect sales taxes owed to other states.

Mr. Felsen said the license-plate missions in New Jersey and Pennsylvania were the first time his department had sent people to monitor cars in parking lots. Since the early 1980's, New York has uncovered tax evaders mainly as a result of information-exchange agreements with other states. "In essence, those states audit their retailers and send names of New Yorker customers to us and we do the same in return," he said.

For years, New Yorkers have shopped for clothing in New Jersey and Pennsylvania, lured in part by the fact that those states levy no sales tax on clothing. Now, New York has changed strategies, provoked by the Ikea ads publicizing an expansion of a sales-tax break available in urban enterprise zones in New Jersey. As of Nov. 27, New Jersey began permitting retailers in parts of Elizabeth, Jersey City, Kearny and Orange to charge a 3 percent sales tax on purchases instead of the state's usual 6 percent rate. The tax break had already been in effect in six other economically depressed areas. Ikea Defends Itself

While Ikea insists it was not breaking any law, Mr. Wetzler accused the company of encouraging tax evasion. Acting on his request, the New York State Attorney General and the New York City Department of Consumer Affairs are examining whether the ads were misleading or illegal.

"We don't want to have a problem with the State of New York," said Pamela S. Diaconis, an Ikea spokeswoman. She added that Ikea intends to post signs in its Elizabeth store to inform out-of-state customers that they may have to pay additional taxes in their state.

Mr. Wetzler wants to do more. He is threatening to subpoena records from retailers in the New Jersey urban enterprise zones as well as charge-card companies and trucking companies that deliver their goods to New York to track down tax evaders. He said that Leslie A. Thompson, Director of the New Jersey Taxation Division, agreed to cooperate yesterday. 'Our Main Concern'

"Our main concern at the moment is to point out to our taxpayers what their tax liabilities are in the hope they will comply voluntarily," Mr. Wetzler said. "In the event that fails, we'll engage in whatever enforcement efforts we deem to be cost effective."

Those caught would have to pay the tax, along with penalties and interest, which are explained in the mailing.

That was not a popular idea in the Ikea parking lot last evening.

"That's the most ridiculous thing I ever heard," said Lisa Halgren, 32, a financial manager for a Manhattan corporation. "I work hard. I pay taxes. And if I want to save a little money that's my business and no one else's."

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A version of this article appears in print on December 9, 1992, on Page B00005 of the National edition with the headline: New York State Crosses the Hudson in Search of Taxes. Order Reprints|Today's Paper|Subscribe